Lakeshore Manufacturing must decide whether to set their production capacity next quarter to small, medium or large while hoping that a looming employee strike will not actually materialize. Their projected annual profits $('000) depend on the event of the strike as follows: Part A Small Medium Large Probability No strike 400 470 640 0.5 Select an answer Strike 440 360 -250 0.5 1. What is the best expected payoff and the corresponding decision using the Expected Monetary Value (EMV) approach? $('000) 2. What is the expected value of perfect information (EVPI)? $('000)

Lakeshore Manufacturing must decide whether to set their production capacity next quarter to small, medium or large while hoping that a looming employee strike will not actually materialize. Their projected annual profits $(OOOO) depend on the event of the strike as follows: Part A 1. What is the best expected payoff and the corresponding decision using the Expected Monetarv Value (EMV) approach? 5(1000) akeshore can hire a labour researcher for a $11,900 to obtain further information on he possibiity of a strike. The researcher's report will either be favourable or infanourable. The probability estimates are: Probability of an unfavorable repoth =0.25 Probabitify of no strike olven a fovorable report =0.66. Probabiity of a strike qiven an unfovorabie report =0.54 Report answers to the questions below (\#1 to \#4) in dollars (not in $000 as above). Do not round intermediate calculations. 1. It the researcher glves a fonourabie report, what is the expected value of the optimal declelion? 2. It the rosearcher gives an unfavourable report, what is the expected walue of the optirnal decision? 3. Witat is the expected vaUe With sampie information (EVWSit provided by the resencher? 4. How miselishould Lakeahore gay the resinarchec, of most? 3. What is the expected value with sample information (EVwSI) provided by the tesearcher? A. How much should Lakeshore pay the researcher, at most? 5. Based on the Evsi, should takeshore pay $11,900 for the sample information? 6. What is the efficiency of the sample intormation? Round / to 1 decimal place